The Active Extension

Among practitioners and followers of corporate law in India, the year 2019 brought a surprise in the form of Form INC – 22A. This was claimed to be a form to identify active companies and checking inactive companies. Unlike earlier attempt aim to boost the image of the country and government, this form lost its shine within few hours of its introduction. Unlike earlier, this form had no mention in government communications of success.

We discussed the Form INC – 22A codenamed as Form Active by MCA earlier here. Later on the basis of this Form Active, my prank earlier was written here considered true by many readers. Soon after the introduction of this form date for extension or a solution was demanded by the companies.

This is one of the simplest forms designed by the Indian Ministry of Corporate Affairs. Except to fill two numbers, one email address and two photographs, there is nothing to fill. But, most companies faced glitches. I did a twitter survey. It had a small sample size but reflect the understanding of company secretaries about issues with the form.

I am not impressed with the response. Most respondent (9/11) correctly pointed out poor planning on Form GNL – 2. However I agree with a view (1/11), this form was introduced one year in advance.

Poor Planning on GNL – 2

Form INC-22A has a lot of information which thankfully is prefilled by the background software. If the information is not up to date or not available, the company may not be able to file the Form INC-22A. In all cases, the company may file forms which it missed to file with late payment. This enables the company to at least file this form. This form also enables the regulator to have significant information updated one stroke of form/pen. Buck stop here.

In case of appointment of auditors, a Form ADT – 1 is required to be filed. Other than exceptional cases, From ADT – 1 is once in five-year compliance.

At the time of initial enforcement of the Companies Act, 2013 and rules made thereunder, all forms were not available in one go on 1^st April 2014. Form ADT- 1 was one of them. As in interim measure, the Ministry of Corporate Affairs suggested stakeholders prepare Form ADT – 1 in manually and attached it with Form GNL – 2 (a general purpose form). Stakeholders complied with the law and directions.

The Form ADT – 1 in electronic form was introduced after a gap of almost half a year.

The Form INC – 22A capture Form ADT – 1 not the Form GNL – 2. The reason is simple. The system needs a well and complex programming to understand which GNL – 2 contain a manually filled and attached Form ADT-1. Therefore for all practical purposes, it becomes impossible to get Form INC – 22A auto-filled in case the company filed ADT – 1 during the year 2014.

It is certainly not advisable to file form ADT – 1 for that period again just to fill present Form INC – 22A.

Poor timing of introduction of INC – 22A

As discussed above, Form INC – 22A with present form cannot capture Form ADT – 1 filed in the year 2014 as an attachment to Form GNL – 2.

There may be two solutions to this issue –

1. Ask the service provider to do heavy programming and search MCA database related to the company and capture Form GNL – 2 in which manual Form ADT -1 was attached. It is not a cost-effective exercise. It will consume heavy resource and force system to a downtime.
2. Simply introduce the Form INC – 22A on 1^st January 2020.

Just a delay in the introduction of Form INC – 22A may save thousands of man-hours of companies and company secretaries. If this form is going to file in 1^st January 2020, it will pick details of a form ADT – 1 which is filed in its electronic form. There will not be an issue in auto – fill.

Conspiracy Theory

No, I do not believe the political angle in the introduction of Form INC 22A. This is a matter of less practical exposure and poor stakeholder consultation on the part of MCA.

Future resolution

I suggest deferment of this form till 1^st January 2020. This will save cost and time but serve the purpose.